Savings for college needed
Published 10:11 pm Monday, June 30, 2008
A great example of what can be achieved when folks work with each other rather than at each other occurred during the regular session of the Alabama Legislature, and Alabama families came out the winner.
A bill I offered and was sponsored by Representative Richard Lindsey and Senator Zeb Little to provide a tax deduction for contributions to Alabama's two college savings programs up to $5,000 per year has been signed into law by Governor Riley. With many Alabama colleges and universities raising tuition by double digits this Fall, Alabama families can no longer afford to wait to begin saving for college.
Experts predict a four-year college degree will cost in excess of $100,000 fifteen to twenty years down the road. This tax deduction is a powerful incentive for Alabama families to make saving for college a priority today.
A college degree, whether a two-year technical degree or a four-year university degree, is essential for today's children to compete successfully in the global economy in which we live. According to the 2006 American Community Survey conducted by the U.S. Census Bureau, the average Alabamian with a college degree makes about $18,000 more per year than the average Alabamian with just a high school degree.
So not only do college graduates have more earning power than high school graduates, they have more money to spend in the economy, which helps our retailers. When they buy more things, they pay more sales tax which helps run our cities and counties. They also pay more money in state income tax which helps our school systems.
Statistics show college graduates are more likely to vote, and more likely to participate in community civic activities and philanthropy. They also are more likely to have health insurance than a high school graduate. College graduates are also less likely to commit crime. These are all reasons why we should encourage Alabama's youth to make earning a college degree a personal goal.
I tell parents and grandparents all the time that saving for college is more than an investment in a child's college education - it's an investment in their dreams. It is also an investment in the future economic growth of Alabama.
You may not be able to save the full four-year price tag of a college education in one year. You may not even be able to save the full amount by the time your child goes to college. The more one has saved for college, the less one has to borrow and pay back. Saving is important to help the student avoid being bogged down with a huge debt upon graduation.
The state treasury administers two college savings programs - the Prepaid Affordable College Tuition (PACT) Program and the Alabama Higher Education 529 Fund.
Both programs offer parents state and federal tax advantages to help parents and grandparents save for college. Having two programs allows investors to choose the investment option that best meets their financial situation. Complete details about both programs can be found on the Treasury website, www.treasury.alabama.gov, or by calling 1-800-252-7228.
I thank the members of the Alabama Legislature for working with me to provide an incentive for parents and grandparents to take responsibility for their children's future. I ask all Alabamians to join me in being an advocate for college savings with those in your circle of influence.